MediaTek downbeat on gross margin

AIMING FOR THE SUN:MediaTek aims to boost revenue contribution from its high-end Helio-brand smartphone chips to 20 percent of its total handset chip shipments

Taipei Times
Date: Feb 02, 2016
By: Lisa Wang / Staff reporter

MediaTek Inc (聯發科), which supplies handset chips to China’s Xiaomi Corp (小米) and Huawei Technology Co (華為), yesterday said its gross margin this year would continue to be poor — remaining less than 40 percent — due to intensifying price competition, which last quarter drove the firm’s net profits to an almost three-year low.

MediaTek’s latest forecast came after gross margin plunged to an all-time low of 38.5 percent in the fourth quarter of last year as rivals Qualcomm Inc and China’s Spreadtrum Communications Inc (展訊) wage a price war to vie for bigger market shares.

“Price competition is to continue to weigh on the gross margin of our 3G and LTE chips this year… Gross margin is to be lower than 40 percent,” company vice chairman and president Hsieh Ching-jiang (謝清江) told investors.

Hsieh attributed the downbeat estimate to a rise in the LTE smartphone chip segment — which is expected to account for more than 50 percent of total handset chip shipments this year — as the firm’s margins on LTE chips are poor.     [FULL  STORY]

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